Types of IP Rights in Government Contracts

Question

Can you explain the 3 levels of rights that the government can claim in regards to IP rights: limited, unlimited and government purpose rights. Where is government purpose rights mentioned in the FAR?

Answer

Note that DFAR 227.7103-1 states, ” DoD policy is to acquire only the technical data, and the rights in that data, necessary to satisfy agency needs.”
  1. Limited (DFAR 227.7103-5(c)) – typically in a commercial environment, or any time the item has already been developed and the seller clearly owns the intellectual property.
  2. Unlimited (DFAR 227.7103-5(a))- typically in a cost plus/development environment where the government has paid for development of an item
  3. Government Purpose Rights (DFAR 227.7103-5(b))- can be found in any environment where the government has paid for only modifications or for only part of the development. The seller may build/develop/deliver part of the contract on their own dime (as an investment, because they want a certain piece of the IP, etc). The seller may have already developed a similar item at private expense, but is making certain modifications for the government. Or, it may be what appears to be a new development of a new item, but the seller is using building blocks or pieces of existing technology (read as existing intellectual property) to make the new item.  In summary, the government is getting modified limited rights – they may own aspects of a final deliverable, but not the whole thing. 
In the end, I point out that it is all negotiable!! (DFAR 227.7103-5(d))  If you want the IP, ask for it! There are times where the government is willing to spend the money on development but really has no interest in the IP and/or they realize that allowing the contractor to keep the IP feeds the competitive commercial marketplace.
Whatever the case – always DOCUMENT DOCUMENT DOCUMENT your intellectual property. This includes having IRAD projects and accounts setup to track the effort and money spent. Have a summary document of what was developed in the IRAD.  Register (trademark/copyright/patent) your intellectual property. And, always assert your IP rights with the proposal (DFAR 227.7103-3). We have a separate document listing our IP rights that is included with every proposal.

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